Coca-Cola Inc. (NYSE:KO) traded around $62.82 on February 18, 2022, the highest level, after surging from a low of around $59 in four days. The jump was fueled by an announced increase in the quarterly dividend from $0.42 to $0.44.
The new quarterly dividend leads to a $1.76 yearly payout, making the beverage company a dividend king. This is the 60th annual boost in investor payouts, even as the company said it expected share buybacks amounting to $500 million this year.
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For a company such as Coca-Cola, which is regarded as a wide economic moat, an increase in dividends and share repurchases is always big news. It affirms management’s confidence in the company’s own earnings and the stock price at a time it has been facing increased competition from rivals such as PepsiCo.
Following the announcement, the stock rose from a low of around $60 and broke past the consolidation zone, which started early this year. The stock is also getting boosts from earlier announced fourth-quarter results on February 10 which topped estimates.
Coca-Cola stock reacts to the improved quarterly dividend
Technically, Coca-Cola stock has successfully cleared the previous top at $61, having held with a consolidation zone for around three weeks. The stock rose from a bullish pin bar at the $59.28 support and is now set for higher levels.
With no clear bullish end in sight, any potential retreats would open buy trades at the $59.28 level. However, the stock established support is at $57.17, with a confluence of price action level and the 200-day moving average.
Summary
Coca-Cola presents a buying opportunity based on boosted stock outlook after an increase in quarterly dividend and stock repurchases.
However, traders may need to wait for a retracement to the support at $59.28 or lower at $57.17 to consider entries with higher rewards and lower risks.
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